unbundled services

American Airlines’ roll-out of a new bundled fare structure this week has created some confusion among frequent fliers about what the change means to the way they book tickets. They have nothing to worry about — at least for now. American is not changing the decades-long practice of how fares are published on an airline tariff, and fears of a lack of transparency are misplaced.

You can still see in which booking class your ticket will be issued, though it’s indeed a bit confusing how exactly one would know the difference between the three new fare types by looking at that booking class, which could be the same for all three fares. So let’s break all this down and try to make sense of it.

First, what has American changed? It has bundled products and services that airlines have been unbundling for a few years, though some of those extras like certain seats are still sold separately. When you search domestic fares in the contiguous 48 states on its website, you now get three tabs: lowest fare, refundable (both coach) and Business/First Class. The default tab is lowest fare. In that category, there are three types of fares, as shown below for a one-way trip from Washington to Los Angeles…

The travel-agency community has been fuming for years over its inability to sell airline products that used to be included in ticket prices but no longer are, and with good reason. A travel agent’s value is diminished by such a significant limitation. The airlines, in turn, refuse to make those products available through distribution channels they don’t control because of high costs. So what’s the solution?

According to the American Society of Travel Agents, the answer is government regulation. “The airline marketplace is simply not working,” the organization’s senior vice president, Paul Ruden, wrote today on its website. Even though the Department of Transportation (DOT) is considering mandatory disclosure of extra fees for seat assignments, luggage, premium economy seats, etc., it’s unlikely it will force the airlines to sell those products through the currently dominant third-party distribution channels.

Let’s look at the problem through each player’s prism. If you use a travel agency — traditional or online — you expect full service. You don’t want to be told that your agent can only issue a ticket, but for anything else you need to buy, you have to go to the airline’s website. Then why would you want to pay an agent to book your travel? The other option is for the agent to go on the airline website and make those additional purchases, but that would take more time, and the agency would make no commission. Naturally, agents prefer to accomplish all their transactions in one place, and to get paid for what they sell — that place is a third-party Global Distribution System (GDS)…